Rivian Automotive (NASDAQ:RIVN) is just one of numerous contenders in the electric vehicle (EV) space. However, it’s time to put the key in the ignition and shift into high gear this year, as Rivian just earned accolades from some top analysts. Consequently, I am bullish on RIVN stock for the remainder of 2024.
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Rivian Automotive is a U.S.-based EV manufacturer. The company isn’t profitable, but that’s not unusual among EV start-ups nowadays. Besides, Rivian has a good recent track record of beating Wall Street’s quarterly EPS estimates.
As we’ll discuss later, Rivian is generally favored by analysts. However, not every analyst firm is enthusiastic about Rivian stock; an example would be Wolfe Research, which downgraded the stock from Outperform (equivalent to a Buy rating) to Peer Perform (Hold) with no price target. Nevertheless, investors should hear what other experts have to say about Rivian Automotive and form their own conclusions.
Rivian Exceeds Its Production Target
Even Wolfe Research had to acknowledge some positive things about Rivian Automotive. According to TheFly, Wolfe Research continues to “believe in Rivian’s long-term strategy and has been encouraged by their recently strong production and cost execution.”
I definitely agree with the “strong production” point. Last year, Rivian produced 57,000 vehicles, thereby meeting and beating the automaker’s target of 54,000 units.
So, why did the Wolfe Research analysts downgrade Rivian stock? It sounds like they’re just seeking more clarity. Investors, they warn (per TheFly), will “need more insight into demand for” Rivian’s “R1 platform which has to carry them through 2024 and 2025 before being willing to look further out to the launch of their R2 platform in 2026.”
Sure, Rivian will have to produce and deliver a reasonable number of R1 vehicles (which are both pickup trucks and SUVs) during the next couple of years, as that’s the company’s flagship vehicle line. Do investors really need to wait for all of 2024 and 2025 to pass before making a judgment on Rivian Automotive? By then, RIVN stock might be much higher, and the risk-to-reward scenario may be less attractive.
Analysts Present Bullish Argument for Rivian Stock
The cautious argument of the Wolfe Research analysts should be duly noted. On the other hand, a number of other experts are more optimistic about Rivian Automotive’s future prospects.
First, Stifel analyst Stephen Gengaro initiated coverage of RIVN stock with a Buy rating and a price target of $23. Gengaro, according to Barron’s, cited two positive factors that work in Rivian’s favor. These are “high brand awareness, and cost-cutting that can reduce operating losses.”
Next, Mizuho analyst Vijay Rakesh rated Rivian shares a Buy and published a $30 price target on the shares. Rakesh expects 2024 to be a “key year” for the automaker, and the Mizuho analysts envision Rivian “tracking towards positive gross margins exiting 2024E with sufficient cash to get to its 2026E Georgia facility ramps for its upcoming R2 model.”
Furthermore, Needham analysts maintained their Buy rating and set a $25 price target on Rivian stock. They even went so far as to add the stock Needham’s Conviction List. Circling back to the topic of EV production, the Needham analysts noted Rivian Automotive’s “increased sequential production,” considering it “another datapoint showing the company’s manufacturing progress.”
These are excellent, data-backed counterarguments to the cautionary tone of the Wolfe Research analysts. To all of this, I’d add that Rivian Automotive has commercial vehicle delivery deals with giants of two different industries.
Last year, Rivian inked one deal with the almighty Amazon (NASADQ:AMZN) and then made another deal with telecommunications titan AT&T (NYSE:T). What more evidence should investors need that Rivian Automotive is becoming a go-to fleet-electrification provider? The Wolfe Research analysts can wait a couple of years for more clarity if they want to, but there are already some compelling reasons to forecast robust EV production growth for Rivian.
Is RIVN Stock a Buy, According to Analysts?
On TipRanks, RIVN comes in as a Moderate Buy based on 12 Buys and eight Hold ratings assigned by analysts in the past three months. The average Rivian Automotive stock price target is $25.39, implying 41.3% upside potential.
Conclusion: Should You Consider RIVN Stock?
Not every analyst is bullish on Rivian Automotive, but that’s true of practically every publicly-listed company. The important thing to keep in mind is that analysts generally like Rivian stock, and their optimism is mainly backed up by facts.
Besides, if Amazon and AT&T are willing to strike fleet-electrification deals with Rivian Automotive, that speaks volumes. So, don’t fret if a small number of experts downgrade Rivian. After conducting your full due diligence, feel free to put RIVN stock on your watch list and think about adding a few shares to your portfolio this year.
